Talks to acquire foreign-owned banks stall over price, terms

BEIRUT: Two foreign-owned banks seeking to exit the Lebanese market are still negotiating a fair price for their retail businesses as well as guarantees that most of their staff will not be dismissed by the new owners, insiders said Thursday.

Chairman of Byblos Bank Francois Bassil told The Daily Star that he had been negotiating with Ahli, but said the talks stopped in December after Ahli demand more money for the acquisition.

“We halted the talks after bank asked for more money for the acquisition,” Bassil said. “We are no longer interested in the bank for the time being.”

He decline to give details about the offer made to the bank.

Some bankers said that Bank Audi was still interested in Ahli, but added that the talks had not yet led to any real results.

With customer deposits of over $800 million, Ahli has been operating in Lebanon since 1961. In July 2001, the Lebanon branches of Ahli merged with the Bank of Lebanon and Kuwait SAL to form the present Ahli International Bank SAL, whose head office is located in Bab Idriss in Downtown Beirut. In addition to its headquarters, Ahli Bank has seven branches in Lebanon.

A banker who spoke on condition of anonymity believes the talks with Ahli will drag on for some time.

“I don’t think the name of the winner will be announced anytime soon. There is a lot of due diligence and research involved in these talks. Ahli wants to leave the Lebanese market but not at any price,” the banker said.

He added that any Lebanese bank interested in acquiring a foreign-owned bank needed guarantees of a handsome return on their investment.

“Most of our banks have double digit growth in profits and deposits and for this reason these banks want to make sure that their investments in a foreign lender yield good results in one or two years at least,” the banker said.

Another banker stressed that leading lenders were unwilling to pay big money for a bank with very small assets.

“Banks are not going to pay money above the true book value of the lender. I can’t imagine a leading player paying big bucks for a bank making a profit of less than $3 million a year,” the banker said.

Bassil told The Daily Star earlier that foreign-owned banks were exiting the market because they could not compete with well-established Lebanese banks, which have been in business here for many decades.

Emirates Lebanon Bank has posted a statement on its website denying reports that it plans to sell its retail business in the country and even said that it was looking to acquire another bank with a lot of branches.

However, sources said that Credit Libanais held informal talks with Emirate Lebanon Bank to examine the prospects of acquisition but the talks did not lead to any results.

Standard Chartered, whose assets and deposits fell in 2012 and 2013, has also been holding talks with a number of Lebanese banks in recent months, with no clear sign that these negotiations will come to an end within the next two weeks.

One of the suitors told The Daily Star that Standard Chartered had been sending questions to all the candidates before deciding on the name of the buyer.

“It seems that Central Bank Governor Riad Salameh does not want to sell the bank to an investment bank because he does not want to add another bank license,” another source said.

He added that Salameh was working to convince Bank Audi to step in and buy the retail business of Standard although the assets of the bank are insignificant.

“They [Standard] have assets of less than $100 million. Any major bank can generate these assets in just two months,” the source explained.

A version of this article appeared in the print edition of The Daily Star on January 31, 2014, on page 5.

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London-based bank Standard Chartered and Amman-based Ahli International Bank are holding talks with some of the local lenders which are keen to expand their presence and balance sheets in Lebanon.

Some bankers said that Bank Audi was still interested in Ahli, but added that the talks had not yet led to any real results.

Bassil told The Daily Star earlier that foreign-owned banks were exiting the market because they could not compete with well-established Lebanese banks, which have been in business here for many decades.

"It seems that Central Bank Governor Riad Salameh does not want to sell the bank to an investment bank because he does not want to add another bank license," another source said.

He added that Salameh was working to convince Bank Audi to step in and buy the retail business of Standard although the assets of the bank are insignificant.